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Key Takeaways

Current Mortgage Rates: Right now, our best 5-year fixed mortgage rate is 4.15%, while the 5-year variable rate is 5.30% (which is Prime – 1.15%).

Expected Changes: In October, we expect fixed rates to keep going down a little bit. Also, variable rates will likely drop after the Bank of Canada announces a 0.25% rate cut on October 23rd.

Opportunities for First-Time Home Buyers: For those looking to buy their first home, now is a great time. Sellers are realizing that home prices are growing more slowly due to high interest rates, which have made it hard for many buyers to enter the market. As a result, the number of available homes is increasing, especially for condos. This trend should continue for the next few months until more people feel ready to buy when mortgage rates drop.

Mortgage Renewal Planning: If you’re a homeowner getting ready to renew your mortgage, you can use our Mortgage Renewal Calculator. This tool helps you see what rates to expect from your lender when it’s time to renew. It also shows what your new monthly payment might look like and how Perch can assist you.

Staying Informed on Mortgage Options: Homeowners who want to know when it’s smart to switch lenders or break their mortgage early can sign up for Perch. We calculate the potential benefits weekly for all your properties. So, make sure to create your free profile today!

Mortgage Rates Prediction

In October, we think fixed mortgage rates will keep dropping a little. We also expect variable rates to go down after the Bank of Canada announces a 0.25% rate cut on October 23rd.

Right now, Canada’s bond yields—which help determine fixed mortgage rates—are moving downwards. This trend is shown in the latest reports from the Bank of Canada.

Bank of Canada Rate Announcement

Let’s look at some of the main factors that the Bank of Canada is keeping an eye on to figure out which direction they will take. Right now, all signs suggest a rate cut is very likely.

GDP Growth: The Bank of Canada expects the country’s GDP growth to be 1.20% for 2024. In the first and second quarters of 2024, growth was 1.8% and 2.1% respectively, which means the rest of the year might be slower.

Inflation: Core inflation (the yearly rate of price increases) in August slowed to 1.5%, down from 1.7% in July. This rate is now below the Bank’s 2% target, indicating that inflation may weaken even more.

Unemployment: The unemployment rate ticked up to 6.6% in August, which is 1.1% higher than a year ago. The Bank of Canada thinks this is an acceptable level, suggesting there’s room in the job market and that wage growth isn’t too high.

Buyer Mortgage Balances Prediction

We believe that properties other than condos will have steady prices. However, prices for condos in major markets are likely to go down until we clear out the extra homes available for sale. This trend is beneficial because it will lead to lower mortgage balances, which means lower monthly payments.

Recently, there have been changes in regulations that raise the insured limit from $1 million to $1.5 million. This will likely further reduce the demand for condos. Our CEO, Alex Leduc, recently discussed this topic in an interview.

Home Prices

As a general rule, if the Sales to New Listings Ratio (SLR) is above 60, it’s considered a seller’s market. When the SLR is below 30, it’s a buyer’s market, and between the two is a balanced market. In a seller’s market, prices usually rise because more people want to buy than there are homes for sale. Conversely, in a buyer’s market, prices typically drop since there are more homes for sale than buyers.

According to CREA, Canada has transitioned into a balanced market, with a national sales-to-listing ratio (SLR) of approximately 53. However, this figure varies significantly across different cities. For example, the Greater Toronto Area is experiencing a buyer’s market, reflected in an SLR of just 21. The SLR for condominiums is even lower, at 17, due to a wave of new developments entering the market.

Additionally, CREA reports that the National Composite MLS Home Price Index (HPI) showed no change between July and August, indicating that home prices have remained stable for the majority of 2024.

Conclusion

In summary, as mortgage rates shift and the market continues to evolve, both buyers and homeowners have plenty to consider. Keeping an eye on these trends will help everyone make informed decisions about their financial futures. Whether you’re a first-time homebuyer or a seasoned homeowner, staying informed is key to navigating the current housing market successfully.

This version maintains a friendly and easy-to-read tone, uses transition words effectively, and keeps complex economic terms understandable.